Beardsley v. Beardsley

• Decision Date: 02 February 1891
• Citation: 138 U.S. 262,11 S.Ct. 318,34 L.Ed. 928
• Parties: BEARDSLEY v. BEARDSLEY
• Court: U.S. Supreme Court

138 U.S. 262

11 S.Ct. 318

34 L.Ed. 928

BEARDSLEY v. BEARDSLEY.

February 2, 1891.

[Statement of Case from pages 262-264 intentionally omitted] J. M. Moore, A. H. Garland, and Heber J. May, for appellant.

Daniel W. Jones, for appellee.

Mr. Justice BREWER, after stating the facts as above, delivered the opinion of the court.

The first and principal question in this case arises on the contract of January 1, 1882. By the appellant it is claimed that this is a mere executory contract, an agreement to sell; by the appellee, that it is an executed contract, a sale with reservation of security. The distinction is obvious, and the significance important. If an agreement to sell, the moving party must be the purchaser. If a sale, an executed contract with reservation of security, the moving party is the vendor, the one retaining security. If an agreement to sell, the moving party, the purchaser, must within a reasonable time tender performance or make excuse therefor. If an executed con- tract, a completed sale, then the moving party is the vendor, the security holder, and he assumes all the burdens and risks of delay. What, therefore, is the significance and import of this instrument? This, as claimed by the appellant, is not to be determined by any separate clause, but by the instrument as a whole. The rule is well stated by Mr. Justice STRONG, delivering the opinion of this court, in Heryford v. Davis, 102 U. S. 235, 243, where he says: 'The answer to this question is not to be found in any name which the parties may have given to the instrument, and not alone in any particular provisions it contains, disconnected from all others, but in the ruling intention of the parties, gathered from all the language they have used. It is the legal effect of the whole which is to be sought for. The form of the instrument is of little account.'

It is not always easy to determine whether an instrument is a contract of sale or one to sell; yet certain rules of interpretation have become established. These rules are noticed in the opinion delivered in the Elgee Cotton Cases, 22 Wall. 180, 188. Two of these rules have no application here, as they refer to those steps necessary to put the property into a deliverable state, or the determination of the price by weighing, measuring, and testing. The third only is significant, which is there stated in these words: 'Where the buyer is by the contract bound to do anything as a consideration, either precedent or concurrent, on which the passing of the property depends, the propety will not pass until the condition befulfilled, even though the goods may have been actually delivered into the possession of the buyer.' Tested by this rule, this instrument must be adjudged, not a contract to sell, but a sale with reservation of security. Note the language of the instrument, 'which is sold.' Again, 'which, though standing in my name, belongs to him.' These words imply nothing executory, but something executed. It is not that the vendor will sell, but has sold. Not that the title remains in the vendor, yet to be transferred, but that it already has been transferred. The ownership, equitable if not legal, is in the vendee. It is not that the stock belongs to the vedee , upon payment, as appeared in the case of French v. Hay, 22 Wall. 231, but that it is now his, subject to a lien. Its meaning is therefore that of a sale, with retention of the legal title as security for purchase money. It is an equitable mortgage, and the rights created and assumed by it are like those created and assumed when the owner of real estate conveys by deed to a purchaser, and takes back a mortgage as security for the unpaid purchase money. Under those circumstances action is the duty of the vendor and mortgagee, and delay imperils no right of the purchaser and mortgagor. We have little doubt as to the significance of this contract, and hold that its effect was to make the appellee one-third owner with the appellant of the stock of the railroad company. Such, obviously, is the import, and therefore such must be adjudged the intention of the parties by this contract. With this construction of the instrument, it is unnecessary to consider the various suggestions made by counsel for appellant upon the theory that the contract was purely executory, a mere contract to sell. Taking it as an executed contract, one by which the ownership passed to the appellee, with a reservation of title simply as security for the purchase money, in other words, an equitable mortgage,—we pass to the second and most difficult matter in the case.

Appellant contends that it was a mere stock transaction, while appellee contends that it is not only in harmony with, but a part of, the full arrangement between the brothers, to-wit, a joint interest in the railroad enterprise, on the basis of a two-thirds share in the appellant, and a one-third in the appellee. The instrument, by itself considered, expresses a stock transaction. If that was the extent of the arrangement between the brothers, then the appellant might enter into subsequent contracts with the railroad company, or any new corporations organized by the parties interested in the old company, without thereby interesting his brother in such contracts, or entitling him to a share in the proceeds thereof. He, of course, could not deprive him of any interest in the corporation, or the corporate property, evidenced by his ownership of stock; but ownership of stock of a corporation does not of right give a proportional interest with every contractor in the contracts made by him...